New York Fed to Publish Research Series Examining Bank Failures Throughout History

NEW YORK-Starting on Monday, November 21, 2024, at 7:00 AM Eastern Time, the Federal Reserve Bank of New York will publish a three-part research series on its Liberty Street Economics blog investigating the leading causes of commercial banks failures in the United States throughout history.

The series titled "Why Do Banks Fail?" will be published on November 21, 22, and 25.

The blog posts will explore whether bank failures are primarily caused by bank runs or by deteriorating solvency. They will include data analysis on more than 37,000 commercial banks and 5,000 bank failures that have occurred between 1865 through 2023.

This series builds on an earlier Staff Report from September 2024 and will include the following posts:

• "Why Do Banks Fail? Three Facts About Failing Banks" outlines the three main characteristics failing banks share and examines the relationship between rapid asset growth and the deterioration of bank fundamentals. (November 21)
• "Why Do Banks Fail? The Predictability of Bank Failures" explores forecasting the likelihood of future failures using accounting metrics from publicly available financial statements that measure a bank's insolvency risk and funding vulnerabilities. (November 22)
• "Why Do Banks Fail? Bank Runs versus Solvency" uses historical data to determine whether bank runs on healthy banks or insolvency due to balance sheet deterioration is the primary cause of bank failures. This final post also discusses implications of the research findings for bank examiners, depositors, and investors. (November 25)